Vivimed Labs Limited

Q4 and Full Year FY2015 Earnings Presentation

www.vivimedlabs.com
Vivimed Labs Ltd 2010 All rights reserved
1 30,
May
2015

Important Notice
No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy,
completeness or correctness of the information or opinions contained in this presentation. Such information and opinions are in all events
not current after the date of this presentation. Certain statements made in this presentation may not be based on historical information or
facts and may be "forward looking statements" based on the currently held beliefs and assumptions of the management of Vivimed Labs
Limited (Company or Vivimed), which are expressed in good faith and in their opinion reasonable, including those relating to the
Companys general business plans and strategy, its future financial condition and growth prospects and future developments in its
industry and its competitive and regulatory environment.
Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results,
financial condition, performance or achievements of the Company or industry results to differ materially from the results, financial
condition, performance or achievements expressed or implied by such forward-looking statements, including future changes or
developments in the Companys business, its competitive environment and political, economic, legal and social conditions. Further, past
performance is not necessarily indicative of future results. Given these risks, uncertainties and other factors, viewers of this presentation
are cautioned not to place undue reliance on these forward-looking statements. The Company disclaims any obligation to update these
forward-looking statements to reflect future events or developments.

This presentation is for general information purposes only, without regard to any specific objectives, financial situations or informational
needs of any particular person. This presentation does not constitute an offer or invitation to purchase or subscribe for any securities in
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from. This presentation is confidential and may not be copied or disseminated, in whole or in part, and in any manner.

Vivimed Group Overview

A leading international brand in the Specialty Chemicals and Pharmaceuticals with global presence
R&D Centres:

Team Size

Manufacturing
facilities

5
R&D Team:

+2,300 People

170+ personnel

67.7%
Healthcare

API

Contract FDF

Branded FDF

12 (4 USFDA)

32.3%
Specialty Chemicals

Personal Care

Home Care

Industrials

FY2015 Net Sales of Rs. 13,860 million (up 2.0% y-o-y)

EBITDA of Rs. 2,228 million (up 4.4% y-o-y) at margin of 16.1% (up 38 bps)
3

Vivimed Group Overview

Preferred supplier to the leading global brands

Consolidated Financial Performance

Performance Highlights: FY2015 vs. FY2014

Net Sales of Rs. 13,860 million

o Increased 2.0% y-o-y

FY2015 Revenue Breakup

14.6%

2.8%

67.7%

14.9%

EBITDA of Rs. 2,228 million (up 4.4%)

o EBITDA margin of 16.1%

Net Profit of Rs. 721 million (up 8.5%)

o Net Profit margins of 5.2%

Healthcare
Home Care

Personal Care
Industrials

Commenting on the performance, Mr. Santosh Varalwar, MD and CEO of Vivimed Labs said:
We have managed to improve our operating profit margins in FY15 despite the unfavourable forex movement
and continuing investment phase across both the businesses. Revenues have been stable on a yearly basis
with the outlook being positive over the medium term with our focus on product mix, customer relationships
and quality assurance likely to be key differentiators for us. On the operational side, our past efforts and
investments started to yield results. In the Healthcare segment, our focus on product quality and regulatory
compliances resulted us in being a preferred supplier to large multinational healthcare companies in the
regulated markets. Furthermore, in the Speciality Chemicals we continued to scale up existing accounts and
win new customers.

We have a strong pipeline of products in both the Healthcare and Speciality Chemicals business. New product
launches and investment in R&D remains a focus area for the management team with new product filings.
Products, people, manufacturing plants and strong processes remain focus areas for the team. This gives us
the confidence for a sustainable growth and an exciting future for the Company

Financial Performance
Consolidated Financials
Q4

y-o-y

Q3

q-o-q

Full Year

y-o-y

FY2015

FY2014

Growth
(%)

FY2015

Growth
(%)

FY2015

FY2014

Growth
(%)

3,567

3,721

(4.1)%

3,447

3.5%

13,860

13,590

2.0%

526

584

(10.0)%

603

(12.7)%

2,228

2,133

4.4%

14.8%

15.7%

16.1%

15.7%

179

110

721

664

Margin (%)

5.0%

3.0%

5.2%

4.9%

Basic EPS (Rs.)

11.08

6.81

44.47

40.97

(Rs. million)
Net Sales
EBITDA
Margin (%)
Net Profit

17.5%
62.5%

206

(12.7)%

6.0%
62.5%

12.69

(12.7)%

8.5%

8.5%

Note: Net Sales includes Other Operating Income

Financial Performance
Management Perspectives
Q4 FY2015
Revenues declined 4.1% to Rs. 3,567 million due to unfavourable variation in Euro, in particular in the API
segment. This was partly offset by pick up in the Speciality Chemicals division during the quarter as key
accounts continue to experience significant growth
EBITDA declined by 10.0% to Rs. 526 million at 14.8% margin. This was primarily due to lower profitability in the
Speciality Chemicals segment which was impacted by significant depreciation in Euro coupled with continuing
investment phase in the Healthcare business. However, Healthcare segment profitability picked up as product
mix improved in the API business and capacity utilization improved in the formulation business (EBIT margin of
7.8% v/s 6.4% last year)
FY2015
Revenues increased marginally by 2.0% to Rs. 13,860 million. Healthcare revenues remained stable due to the
impact of unfavourable foreign currency variations on the API segment, although in terms of constant currency it
recorded strong performance. Speciality Chemicals revenues grew 8.7% to Rs. 4,504 million as growth picked
up in Q4, with the product rationalization being complete
EBITDA increased by 4.4% to Rs. 2,228 million despite decline in Q4 FY2015 margins due to exchange rate
fluctuations in the overseas subsidiaries and increased SG&A investments. EBITDA margins increased
marginally to 16.1% driven by better product mix in both the Speciality Chemicals and the API businesses
FY2015 Finance Cost was Rs. 790 million (up 31.1% y-o-y) and Rs. 216 million for Q4 FY2015 (up 22.3% y-oy). Effective tax rate for FY2015 was 7.1% and for Q4 FY2015 was (9.8)%. This was primarily due to deferred
tax assets in subsidiary companies
7

Financial Performance
Outlook & Strategy
Outlook for margins remains positive as the Healthcare business is expected to see benefits of higher utilization,
improved product mix and cost optimization in the medium term. New product launches and sustained
investment in R&D remains a focus area for both the Healthcare and Speciality Chemicals businesses with new
product filings
Vivimed continues to focus on new product development and maintaining its quality compliant manufacturing
platform with investments in plants, processes and products being key areas of focus for the group. During the
last year, Vivimed successfully completed, without any major observations, audits for 3 out its 4 US FDA
approved manufacturing sites

Segment Highlights
Healthcare segment

FY2015 Revenue of Rs. 9,339 million (vs. Rs. 9,365

million in FY2014)

EBIT of Rs. 665 million at 7.1% margin (vs. 6.9%)

In the API segment, subdued revenue growth was due to

foreign currency impact; in terms of constant currency it
recorded strong performance

Continued focus on optimizing capacity utilization, cost

control and harnessing the healthy order book in custom
manufacturing

In the FDF segment, performance improved significantly

due to volume growth in the India institutional business
as well as brand formulations

The FDF business is expected to continue robust growth

with new product launches in the RoW and CIS markets.
FDF in the regulated markets will remain an area of
investment with new product filing being a priority

Revenue Breakup (FY2015)

3.3%

75.2%

21.5%

API

Contract FDF

Branded FDF

Segment Highlights
Specialty Chemicals segment

FY2015 Revenue of Rs. 4,462 million up 7.7%

EBIT of Rs. 900 million at 20.2% margin (vs. 19.9%).

Margins were sustained despite significant pressure on
Q4 FY2015 profitability primarily due to currency
fluctuation (i.e. depreciation of Euro)

Personal care segment recorded an increase in

manufacturing volumes largely from the skin and hair
care segments. These helped offset the subdued
offtake in older products which have been delayed due
to temporary postponement of orders by some clients.
New product launches in the hair dyes, sunscreen and
skin care segments to drive growth in FY2016

Home care segment performance was driven by

antimicrobials and preservatives segments

Industrial segment continues to grow with new

product offerings in photochromics and imaging
chemicals. New Next-gen / alternatives projects being
undertaken with global players to come in production in
coming year

New distributor appointments to expand outreach

continue to be an area of focus
10

Revenue Breakup (FY2015)

8.7%

46.2%

45.1%

Personal Care

Home Care

Industrial

Segment Highlights
Q4
(Rs. million)
Segment Revenue

FY2015

y-o-y
FY2014 Growth (%)

Q3

q-o-q

FY2015 Growth (%)

Full Year
FY2015

y-o-y

FY2014 Growth (%)

3,562

3,682

(3.2)%

3,437

3.6%

13,801

13,508

2.2%

Specialty chemicals

1,497

1,184

26.5%

1,093

37.0%

4,462

4,143

7.7%

Healthcare

2,065

2,498

(17.3)%

2,344

(11.9)%

9,339

9,365

(0.3)%

379

413

(8.2)%

418

(9.4)%

1,566

1,472

6.4%

10.6%

11.2%

11.3%

10.9%

219

237

900

826

Margin (%)

14.6%

20.0%

20.2%

19.9%

Healthcare

161

176

665

645

Margin (%)

7.8%

7.1%

7.1%

6.9%

14,870

14,740

0.9%

14,247

4.4%

14,870

14,740

0.9%

Specialty chemicals

8,049

8,003

0.6%

8,020

0.4%

8,049

8,003

0.6%

Healthcare

6,821

6,737

1.2%

6,227

9.5%

6,821

6,737

1.2%

EBIT
Margin (%)
Specialty chemicals

Capital Employed

11

12.2%
(7.6)%

268

(18.4)%

24.5%
(8.9)%

150

6.8%

6.4%

9.0%

3.1%

Quarterly Financial Trends

Net Sales
3,678

Rs. Million

3,447

584

3,567

Rs. Million

3,721

EBITDA and Margins

3,168

Q1 FY15

Q2 FY15

Q3 FY15

17.5%
16.3%

15.7%

14.8%

Q1 FY15

Q2 FY15

EBITDA

Q4 FY15

526

518

15.8%

Q4 FY14
Q4 FY14

603

581

Q3 FY15

Q4 FY15

Margin (%)

Net Profit and Margins

Rs. Million

206
171
110

6.0%

5.2%

4.7%

5.0%

3.0%
Q4 FY14

Q1 FY15

Q2 FY15

Net Profit

12

179

164

Q3 FY15

Q4 FY15

Margin (%)

12

Capital Markets
Shareholding Structure

Key Institutional Investors

37.9%

34.2%

0.2%

27.7%

Promoters

FII

DII

Others

Shareholding Pattern Trend

Shareholders

Mar-14

Jun-14

Sep-14

Dec-14

Mar-15

Promoters1

38.1%

38.1%

38.1%

38.1%

37.9%

FII / FDI

27.5%

27.6%

27.7%

27.7%

27.7%

DII

2.3%

2.3%

0.3%

0.1%

0.2%

Others

32.1%

32.0%

33.9%

34.1%

34.2%

Total

100.0%

100.0%

100.0%

100.0%

100.0%

Note:
1 IFC holds FCCBs

13

Strategic Direction

Where Chemistry and Quality Matters

Continue to strengthen engagements with marquee customer base

through superior product development and delivery capabilities
Move up the value chain through vertical integration in Healthcare
(R&D to manufacturing of API / FDF / brands) and target niche
opportunities in the Specialty Chemicals segment

Optimize utilization of existing global manufacturing platform to enhance

capital efficiencies and shareholder returns
Increase penetration in existing regulated and semi regulated Healthcare
markets and target selected new geographies
Focus on early stage innovative R&D and product development to drive
monetization of business opportunity across all segments
Leverage the strengthened management team to support the future
growth aspirations and deliver sustainable returns over the longer term
Successful integration of recent initiatives which will bring scalability
through a larger opportunity space and a platform to address the same

14

Global Reach
A multinational global platform that provides Vivimed access to markets and significant cost advantage

Kashipur, Uttarakhand
Haridwar, Uttarakhand

Sant Celoni, Spain

Lli de Vall, Spain

Kolkata

Cuernavaca, Mexico
Bidar,
Karnataka

Bonthapally, Hyderabad
Bolarum, Hyderabad
Jeedimetla, Hyderabad
(2 facilities)

Alathur, Tamil Nadu

Note: Names in Green indicate facilities which are US FDA approved

Facilities
Healthcare API

Mexico

Spain

UK

China

USA

India

Total
3

Healthcare FDF

Specialty Chemicals Active Ingredients

12

Total Facilities

R&D Facilities

Global Support Offices

15

Strong Transnational Management Team

Key Management

Profile

Dr. V Manohar Rao

Chairman

Santosh Varalwar
Managing Director & Chief
Executive Officer

Sandeep Varalwar
Executive Director
Mark I Robbins
Chief Executive, Uquifa,
Vivimeds API Division

George Polson
COO, Specialty Chemicals,
VLI, USA

Saurabh SG
Director, Corporate Strategy
and Business Development

16

Retired as joint director of The Veterinary Biological and Research Institute and has over 40 years of
industry experience
Responsible for developing a sophisticated and well-equipped in-house quality control and introduced
various cost control systems in production process
First generation entrepreneur
Business growth strategy and leadership; Focus on key global client relationships
Previously associated with Shipping Corporation of India
Associated with Vivimed since its incorporation and leads Vivimeds Healthcare FDF division
Over 19 years of experience in manufacturing and marketing in the Healthcare industry

Associated with Chemicals and API industries for over 24 years

Previously a member of the management executive committee of Yule Catto, UK
Previously worked with Johnson Matthey for 10 years

Responsible for the Vivimed Groups overall strategic initiatives; and business operations of the
healthcare segment
Has more than ten years of experience across investment management with global firms such as
Prudential Financial, Kotak Mahindra and Credit Suisse

Member of the Institute of Marketing and Engineering , UK

Leads the operations of the Global Specialty Chemicals Division and has
Industry experience of over 30 years with reputed companies such as Lonza and DSM
Holds ~40 US and World patents
Member of the American Chemical Society (ACS), the Society of Cosmetic Chemists (SCC), and Society
of Investigative Dermatology (SID) and American Society of Pharmacognosy

Annexure Quarterly Consolidated P&L Statement

Profit & Loss Statement (Rs. million)
Revenues
Net Sales / Income from Operations (Net of Excise Duty)
Other Operating Income
Total Revenues
Expenses
Cost of Raw Materials Consumed
Changes in Inventories of Finished Goods, WIP and Stock in Trade
Employee Benefit Expenses
Other Expenditure
Total expenses
Operating Profit (EBITDA)
Depreciation and Amortisation Expenses
EBIT
Finance Costs
PBT
Tax Expenses
PAT
Basic EPS (Rs)
Margins (%)
Gross Margins
EBITDA margins
PAT margins
Y-o-Y Growth (%)
Total Revenues
EBITDA
PAT
Q-o-Q Growth (%)
Total Revenues
EBITDA
PAT
Effective Tax Rate
17

Q4 FY14

Q1 FY15

Q2 FY15

Q3 FY15

Q4 FY15

3,682
39
3,721

3,665
12
3,678

3,136
32
3,168

3,437
10
3,447

3,562
5
3,567

1,903
(299)
412
1,119
3,136
584
171
413
176
237
126
110
6.81

1,876
(145)
472
894
3,097
581
165
416
184
232
60
171
10.57

1,672
(192)
423
747
2,650
518
165
353
197
156
(8)
164
10.13

1,729
(152)
478
789
2,844
603
184
418
194
225
19
206
12.69

1,716
(43)
472
895
3,041
526
147
379
216
163
(16)
179
11.08

56.9%
15.7%
3.0%

52.9%
15.8%
4.7%

53.3%
16.3%
5.2%

54.2%
17.5%
6.0%

53.1%
14.8%
5.0%

25.6%
29.3%
(26.3)%

6.9%
18.9%
(14.3)%

3.1%
(1.1)%
0.2%

2.7%
12.4%
8.3%

(4.1)%
(10.0)%
62.5%

10.8%
9.0%
(41.8)%
53.3%

(1.2)%
(0.6)%
55.1%
26.0%

(13.9)%
(10.8)%
(4.2)%
(5.4)%

8.8%
16.4%
25.3%
8.5%

3.5%
(12.7)%
(12.7)%
(9.8)%

Annexure Consolidated Balance Sheet

Liabilities (Rs. million)
Shareholders funds
Share capital
Equity share capital
Prefrence share capital
Reserves and surplus
Money recieved against share warrants
Total Shareholders Funds
Non current liabilities
Long term borrowings
Deferred tax liabilities
Other long term liabilities
Long term provisions
Total Non Current Liabilities
Current liabilities
Short term borrowings
Trades payable
Other current liabilities
Short term provisions
Total Current Liabilities

Mar-14

Liabilities total

18

Mar-15

162
639
4,778
24
5,604

162
639
4,791
0
5,592

4,197
255
822
52
5,326

4,952
94
475
32
5,553

3,754
1,905
1,388
397
7,444

3,725
1,887
1,764
464
7,839

18,374

18,985

Assets (Rs. million)

Non current assets
Tangible assets
Intangible assets
Tangible and Intangible assets
Capital work in progress
Non current investments
Other non current assets
Total Non Current Assets
Current assets
Inventories
Trade receivable
Cash and bank balance
Short term loans and advances
Other current assets
Total Current Assets

Mar-14

Mar-15

7,078
1,001
8,079
381
2
202
8,665

6,963
1,172
8,135
903
27
0
9,065

4,267
3,478
346
1,395
223
9,709

4,314
3,296
267
1,852
191
9,920

Assets Total

18,374

18,985

Annexure Working Capital Cycle

171

Number of days

159

151

135
112

115

114

55

51

50

101

94

87

FY 2013

FY 2014

FY 2015

86

121

FY 2012
Debtor days

19

158

Creditor days

Inventory days

Working Capital Cycle days

Annexure Key Ratios

FY2012

FY2013

FY2014

FY2015

Net Worth (Rs. million)

4,748

5,091

5,604

5,592

Net Debt (Rs. million)

5,079

5,741

7,606

8,410

Fixed Assets (Rs. million)

5,953

7,090

8,079

8,135

ROE (%)

18.4%

18.8%

13.4%

14.5%

ROCE (%)

8.5%

10.7%

8.3%

10.2%

Interest Coverage Ratio (x)

3.74

3.39

2.44

1.98

Net Debt to EBITDA (x)

3.82

2.91

3.57

3.78

Net Debt to Equity (x)

1.07

1.13

1.36

1.50

Notes:
1 Interest Coverage Ratio: EBIT / Finance Cost
2 ROE: Net Income / Shareholders Equity excluding Preference Share Capital
3 ROCE: EBIT * (1 ETR)/ Capital Employed
4 Capital Employed: Net Worth + Total Debt
20

Glossary

ANDA: Abbreviated New Drug Application

API: Active Pharmaceutical Ingredients

CEP: Certificates of Suitability to the monographs of European Pharmacopoeia

CMO: Contract Manufacturing Organization

DMF: Drug Master File

FDF: Finished Dosage Formulation

H&PC: Home and Personal Care

MRs: Medical Representatives

MA: Marketing Authorization

21

Thank You
Contact Details:

Vivimed Labs Limited

(CIN: L02411KA1988PLC009465)
Veernag Towers, Habsiguda, Hyderabad 500 007

www.vivimedlabs.com
Phone: +91 40 2717 6005 / 06
Fax: +91 40 2715 0599

Ajay Mogili
Vivimed Labs Limited
Saket Somani
Churchgate Partners

+91 40 2717 6005

Ajay.Mogili@vivimedlabs.com
+91 22 3953 7444
vivimed@churchgatepartnersindia.com